Wednesday 7 July 2010

Jurisdictional tactics: Penguin v American Buddha

Sometimes it seems as if the internet transcends physical space. But no – it’s just in a lot of different places. Consequently when copyright is infringed online, claimants may find they are faced with a choice of where to sue.

American Buddha operates free online ‘libraries’: Penguin USA say four of their titles have been made available to these libraries’ members without authorization. Penguin has sued, but not in Arizona, where American Buddha are based – in New York. At first instance, American Buddha successfully challenged the jurisdiction of the NY district court but Penguin appealed to the Second Circuit Court of Appeals. They in turn are now referring the question to the New York Court of Appeals... Why hasn’t Penguin sued in Arizona? Perhaps because the copyright jurisprudence of the Second Circuit is more predictable and favourable to right owners than that of the Ninth.

New York state law allows jurisdiction over an out-of-state party who commits a tort in the state, or commits a tort outside the state that causes injury within NY. Penguin is not pursuing the first of these. The district court said Penguin ‘appears to recognize that “in the case of web sites displaying infringing material the tort is deemed to be committed where the web site is created and/or maintained” ’ – a take on international copyright law that is not shared in all corners of the world.

Instead, Penguin wants to argue that American Buddha’s infringements outside the state have caused them harm within NY. The question for the court is: if the alleged copyright infringements cause injury to Penguin, where does that injury take place? The district court believed the injury would be where the infringement occurred – i.e. American Buddha’s servers.

To prove that American Buddha’s alleged copyright infringement had caused injury within NY, Penguin might perhaps have argued that American Buddha had caused a loss of customers in Manhattan. Penguin, however, seems to be focusing on a different kind of injury. The argument is that the infringements cause harm to their copyrights, which are held in New York. This reasoning relies on the notion that copyrights have a physical location for jurisdictional purposes.

Why would Penguin pursue this philosophically challenging line of attack? Presumably the damages obtainable in relation to harm to the copyrights generally could apply to loss of sales anywhere, not just those in the Big Apple? The discerning internet forum shopper is on the lookout for a jurisdiction where he can mop up all the disparate infringements in one go. Usually that would mean suing the defendant where he is resident but could this be another way?

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